A call for transparency in the taxpayer rescue of Wall Street
Last week, I wrote that the lack of disclosure surrounding the American International Group bailout had put The New York Times at odds with Bloomberg over a fundamental question: What was Goldman Sachs’s stake in that bailout?
The Times, recall, reported via anonymous sources on September 29 that Goldman’s risk was up to $20 billion, while a lengthy Bloomberg profile of Goldman and its chief executive, Lloyd Blankfein, three weeks later asserted via its own source that Goldman’s risk had been hedged down to zero, implying Goldman had no stake in the AIG bailout.
In its October 21 story, Bloomberg had put it this way (emphasis is mine):Goldman wouldn’t have lost money if AIG had gone out of business, the person said, although the collapse would have caused wide-spread economic distress.
It appears that “wouldn’t have lost money” is not the full story, not by a long shot. Goldman in fact reaped what may be a huge taxpayer-financed windfall, authorized by its former chief executive, Hank Paulson, shortly after its current chief executive, Lloyd Blankfein, was meeting Federal Reserve officials in New York on that very topic....MORE